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Colombia Oil and Gas Report Q1 2010
Business Monitor International, Dec 2009, Pages: 84
Colombia Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's oil and gas industry.
The latest Colombia Oil & Gas Report from BMI forecasts that the country will account for 3.18% of Latin America regional oil demand by 2014, while providing 6.12% of supply. Latin America regional oil use of 6.93mn barrels per day (b/d) in 2001 reached an estimated 7.74mn b/d in 2009. It should average 7.90mn b/d in 2010 and then rise to around 8.61mn b/d by 2013. Regional oil production was 10.30mn b/d in 2001, and in 2009 averaged an estimated 9.67mn b/d. It is set to rise to 10.78mn b/d by 2014. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average 3.37mn b/d. This total had fallen to an estimated 1.92mn b/d in 2009 and is forecast to recover to 2.17mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.
In terms of natural gas, the region in 2009 consumed an estimated 201.2bn cubic metres (bcm), with demand of 256.4bcm targeted for 2014, representing 27.4% growth. Production of an estimated 217.5bcm in 2009 should reach 299.0bcm in 2014, and implies 42.6bcm of net exports the end of the period. Colombia’s estimated share of gas consumption in 2009 was 3.88%, while its share of production was 4.28%. By 2014, its share of gas consumption is forecast to be 3.94%, with the country accounting for 3.85% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$59.00 per barrel (bbl), a 37.3% decline year-on-year (y-o-y). This represents an upgrade from the US$55.00/bbl forecast we were using in the previous quarter. For 2010, we expect to see a significant oil price recovery to US$83.00/bbl for the OPEC basket price, gaining further ground to US$85.00 in 2011 and to US$90.00/bbl in 2012 and beyond.
For 2009, BMI has assumed a global average gasoline price of US$67.46/bbl, with the fuel having peaked in June at almost US$80.00/bbl. The overall y-o-y fall in 2009 gasoline prices is put at 33.7%. The BMI gasoil forecast is for an average price of US$70.59/bbl, assuming a monthly high above US$94/bbl in December 2009. The full-year outturn represents a 41.8% y-o-y fall. The annual jet price level for 2009 is estimated at US$68.45/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put by BMI at US$52.66/bbl, down 39.7% from the previous year’s level.
Colombian real GDP in 2009 is estimated by BMI to have fallen by 0.4%, compared with growth of 2.5% in 2008. We are assuming average annual 3.2% growth in 2010- 2014. The government is working hard to encourage international oil company (IOC) investment and boost near-term domestic oil production, aided by state-owned Ecopetrol. We are assuming oil and gas liquids production of no more than 660,000b/d by 2014, with the country expected to pump 670,000b/d in 2010. Consumption beyond 2009 is forecast to increase by 3-4% per annum to 2014, implying demand of 274,000b/d by the end of the forecast period. The country’s export capability will therefore peak at 431,000b/d in 2010, then decline to 386,000b/d by 2014. Gas consumption is forecast to increase from an estimated 7.8bcm in 2009 to 10.1bcm over the period, met by rising domestic production, which will also provide modest exports toVenezuela.
Between 2009 and 2019, we are forecasting a decrease in Colombian oil production of 23.7%, with crude volumes peaking at 675,000b/d in 2013 and then falling steadily to 500,000b/d by the end of the forecast period. Oil consumption between 2009 and 2019 is set to increase by 37.0%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 318,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 9.3bcm in 2009 to 15.0bcm in 2019. With demand growth of 73.1%, this implies export potential of 1.5bcm by 2019. Details of BMI’s 10-year forecasts can be found in the appendix to this report.
Colombia ranks fourth behind Peru in BMI’s updated Upstream Business Environment rating, well ahead of Trinidad and Argentina. While the absolute resource base is modest, the competitive environment is attractive and licensing terms have improved to become some of the best in the region. Country risk is moderate and Colombia is well placed to retain its strong position in the league table. The country now ranks second behind Brazil in BMI’s updated Downstream Business Environment rating, reflecting its oil demand growth outlook, refining capacity expansion plans, moderate Country Risk and low retail site intensity. Argentina holds third place, but arguably lacks the potential to challenge Colombia.
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